SECURE SYNOPSIS: 07 March 2017
NOTE: Please remember that following ‘answers’ are NOT ‘model answers’. They are NOT synopsis too if we go by definition of the term. What we are providing is content that both meets demand of the question and at the same time gives you extra points in the form of background information.
General Studies – 1;
Topic : Salient features of world’s physical geography.
1) Examine how climate change is affecting rainforests such as Amazon rainforests in South America. (200 Words)
Goh Cheng Leong, Chapter 15
The Amazon rainforest, covering much of northwestern Brazil and extending into Colombia, Peru and other South American countries, is the world’s largest tropical rainforest, famed for its biodiversity. It’s crisscrossed by thousands of rivers, including the powerful Amazon. River towns, with 19th-century architecture from rubber-boom days, include Brazil’s Manaus and Belém and Peru’s Iquitos and Puerto Maldonado.
The Amazon rainforests also called the ‘lungs of the earth’ account for 10% of the world’s terrestrial primary productivity and serves as a major carbon sink for nearly 20% of the total emissions. Climate change, largely induced by increasing anthropogenic activity is instrumental in the rapid degradation of these forests.
Global climate change initiated by global warming is expected to have wide-ranging effects for tropical rainforests. Changes in weather patterns, rainfall distribution, and temperature will result in the transformation of rainforest into drier forest in some areas and the conversion of other forms of forests into tropical forest.
- Rise in vulnerability:
Though tropical forests and their species have lived through significant climate changes in the past (Pleistocene and Holocene epochs), they have less resilience to climate change in the future due to fragmentation and degradation from human activities.
- Rise in temperature:
Higher temperatures are impacting temperature-dependent species like fish, causing their distribution to change. Some terrestrial species have already invaded higher altitude habitats, but it is expected that many will simply disappear from their current habitats.
Increased temperatures and reduced rainfall in some areas may also reduce suitable habitat during dry, warm months and potentially lead to an increase in invasive, exotic species, which then can out-compete native species.
- Change in sea level:
The Intergovernmental Panel on Climate Change (IPCC) suggests that flooding associated with sea-level rise will have substantial impacts on lowland areas such as the Amazon River delta. In fact, the rate of sea-level rise over the last 100 years has been 1.0-2.5 mm per year, and this rate could rise to 5 mm per year.
Sea-level rise, increased temperature, changes in rainfall and runoff will likely cause major changes in species habitats such as mangrove ecosystems. These factors may also affect the region’s fisheries that depend on mangrove habitat as nurseries and refuge.
- Decrease in Rainfall:
Less rainfall during the dry months could seriously affect many Amazon rivers and other freshwater systems, and the people that rely on these resources. One possible disastrous impact of reduced rainfall is a change in nutrient input into streams and rivers, which can greatly affect aquatic organisms. A more variable climate and more extreme events will also likely mean that Amazon fish populations will more often experience hot temperatures and potentially lethal environmental conditions.
- Increase in pest and diseases:
A reduction in rainfall during critical dry months may also lead to increased evapotranspiration and pest and disease infestation, which will likely negatively affect agricultural yields.
- Impact on Human settlements:
In response to global climate change, ecological communities will need to migrate, an effort that will be more difficult because of habitat alteration and fragmentation. More than 51 million people live in this region, which is prone to periodic droughts and famines. Slight climate changes in this region will likely have major consequences for human populations.
The distinct characteristic of Amazon rainforests and its climate has supported certain crucial ecologies such as freshwater zones, and a rich bio-diversity over the years. But, these climatic changes have led to the creeping in of certain changes, which might be harmful to the very sustenance of these forests in the long run.
General Studies – 2
Topic: Formal/informal associations and their role in the Polity
2) Write a critical note on party and election financing in India and suggest reforms. (200 Words)
Elections are lifeblood of Democracy and thus form the most crucial component of overall sociopolitical setup of country. The electoral reforms in India are much discussed topic and Financing electoral system has been a very important part of overall reforms. The corrupt nature of electoral system has kept the best talent of this country away from political career.
The Supreme Court also has emphasized the influence of money power in its various judgments such as KanwarLal Gupta v Amar Nath Chawla, 1975 and Ashok Shankarrao Chavan v Madhavrao Kinhalkar, 2014.
The recent decision taken in Economic survey of India to bring down the contribution to political parties from unknown source to 2000 inr is a positive step towards herculean task ahead.
The election financing in India has following peculiar characters-
- No different consideration is given to party funding and electoral funding. One has to understand that the election time funding is far higher than party funding.
- The regulation of election financing is done by multiple authorities through various laws such as Representation of Peoples Act, Income Tax act, FCRA etc. There is lack of transparency and accountability by political parties in Electoral financing despite of multiple regulatory structure in existence.
- Some regulations cover parties while other covers individual candidates. This creates loopholes in the overall system to invade the prescribed limits on financing.
Eg: regulation under Section 77 of the RoPA only covers individual “candidates”, and not on political parties.
- The decision to legalize corporate funding to political parties in 1985 was taken late. The authorization of corporate contribution requires a resolution to be passed to such effect at the meeting of the Board of Directors under Section 182(1) of the Companies Act, 2013. The empowerment of a small group to decide how to use the funds of a company for political purposes, instead of involving the vast numbers of shareholders (being the actual owners of the company) has also been widely criticized.
- Recent amendment to FCRA allows political parties to receive contributions from foreign companies, there by leaving a scope of external influences. The ban on foreign contributions is no longer in place after the 2016 amendment of FCRA via Finance Act 2016.
- Lobbying gives undue importance to big donors and certain interest groups at the expense of the ordinary citizen and violates what the Supreme Court terms, “the right of equal participation [of each citizen in the polity]”as pronounced in the KanwarLal Gupta v Amar Nath Chawla, 1975.
The suggested reforms to bring transparency can be as below:
- Bringing political parties under right to Information can empower the civil society to keep check on illicit money entering into political setup in general and election process in particular.
- There is need to put limit on contribution accepted and money spent by both political parties and candidates. A significant source of political donations is through corporate funding, which is explicitly permitted under Section 182(1) of the Companies Act of 2013, dealing with prohibitions and restrictions regarding political contributions to political parties.
- There is need to establish a culture of small individual donations to political parties by citizen of the country through the use of Digital payment mode. Donations made by American citizenry for Obamas’ electoral campaign provides a good example of this kind of mode.
- The disqualification of a candidate for a failure to lodge an account of election expenses and contributions reports under section 77 and proposed 77A should be extended from the current three years period up to a five year period, so that a defaulting candidate may be ineligible to contest at least the next elections.
- RoPA should be amended dealing with the “Regulation of Electoral Trusts”, and detailing provisions pertaining to their entitlement to accept contributions, disclosure obligations, and penal provisions (apart from losing income tax exemptions) in line with the changes already made to the IT Act and the ECI guidelines on “Electoral Trust Companies” of 2013.
- Partial State Funding of Elections: A system of complete state funding of elections or matching grants may not be feasible, given the current conditions of the country. Instead, the existing system of indirect in-kind subsidies, with section 78B of the RPA being possibly amended in the future to expand these subsidies.
- Political parties should compulsorily maintain and submit annual audited accounts. There should be additional Disclosure provisions governing political parties.
- Recently launched electoral bonds are welcome step. The scheme has to be provided with incentives to attract people participation.
- There is need to empower Election Commission of India under article 324 rather than enacting multiple legislation and provisions. Election commission of India must be empowered to cancel the elections or declare them null and void if it finds involvement of unaccounted money into the process. Further, a new provision should be inserted requiring the district election officer to make publicly available, on his website for public inspection on payment of prescribed fee, the expenditure reports submitted by every contesting candidate under section 78.
Reforms in the financial contribution can change the face of overall corrupt electoral process to large extent. The above mentioned reforms have to be accompanied by other reforms such as establishment of internal democracy in political parties, training for political cadre etc.
Topic: India and its neighborhood- relations.
3) Write a brief note on the controversy over the Tawang area between India and China. Do you think China’s objections to India’s decision of allowing Dalai Lama’s visit to Tawang is justified? Critically comment. (200 Words)
Controversy over Tawang region-
Tawang was historically part of Tibet. The 1914 Simla Accord defined the McMahon Line as the new boundary between British India and Tibet. By this treaty Tibet relinquished several hundred square miles of its territory, including Tawang, to the British, but it was not recognized by China. However, the British did not take possession of Tawang and Tibet continued to administer and collect taxes in Tawang. When the British botanist Frank Kingdon-Ward crossed the Sela Pass and entered Tawang in 1935 without permission from Tibet, he was briefly arrested. This drew the attention of the British, who reexamined the Indo-Tibetan border and rediscovered that Tibet had ceded Tawang to British India. Tibet did not repudiate the Simla Accord and the McMahon Line but refused to surrender Tawang, partly because of the importance attached to the Tawang Monastery. In 1938 the British made a cautious move to assert sovereignty over Tawang by sending a small military column under Capt. G.S. Lightfoot to Tawang.
After the outbreak of the war with Japan in 1941 the government of Assam undertook a number of ‘forward policy’ measures to tighten their hold on the North East Frontier Agency (NEFA) area, which later became Arunachal Pradesh. In 1944 administrative control was extended over the area of the Tawang tract lying South of the Sela Pass when J.P. Mills set up an Assam Rifles post at Dirang Dzong and sent the Tibetan tax-collectors packing. Tibetan protests were brushed aside. However, no steps were taken to evict the Tibetan from the area North of the pass which contained Tawang town. The situation continued after India’s independence
People’s Republic of China occupied Tibet in 1950 and thereby claimed control over Tawang region and Arunachal Pradesh. China neither accepts agreement of 1914 nor acknowledges MacMohan line drawn by British. Thus China claims Tawang as integral part of her Tibetian province.
Indian government has repudiated this claim and has steadfastly maintained that Tawang and Arunachal Pradesh forms integral part of territory of India. India sights agreement between British and Tibet and handing of Tawang to India after independence. China is also annoyed with India granting refuge to Dalai Lama and Tibetian Buddhists which has fueled the controversy over Tawang.
Is China’s objection over Dalai Lama’s visit is justified?
China’s response to the news of visit of Dalai Lama was that “it is gravely concerned over the Indian government’s decision to allow the Dalai Lama to visit Arunachal Pradesh’s Tawang monastery in early April, and that it would seriously damage bilateral ties. From China’s point of view the step could be defended as it sees Dalai Lama as rebel against Chinese government and India as hostile neighbor that has given refuge to the rebel.
However such claims are entirely misplaced and non-justified because-
- The visit by Dalai Lama to Tawang monastery is religious and spiritual one and do not have any political angles as interpreted by China. India has already made clear that it would not allow Dalai Lama to carry out political activities.
- China seems to put entire weight of bilateral issues over single issues which is absurd and not in spirit of bilateral ties.
- Although in exile, the Tibetian spiritual leader has basic human right to visit Buddhist religious places and preach his followers.
- China sees India’s action of allowing Dalai Lama to visit Tawang area as provocation because China claims Tawang as their part.
The protest by China to visit of Dalai Lama to Tawang has little substance in it. India continues to firm in its policy towards China’s aggression in claiming Arunachal Pradesh and any interference over its internal affairs. Protest over such politically insignificant issue would only strain the ties between two Asian giants.
Topic: mechanisms, laws, institutions and Bodies constituted for the protection and betterment of these vulnerable sections
4) What are the objectives of Sugamya Bharat Abhiyan? Also a write a note on the ‘Inclusiveness and Accessibility Index’. (200 Words)
The Economic Survey 2016-2017, Chapter 8
- Accessible India Campaignor Sugamya Bharat Abhiyan is a program which is set to be launched to serve the differently-able community of the country. The program comes with an index to measure the design of disabled-friendly buildings and human resource policies.
- The flagship program will be launched by the Prime Minister on 3 December 2015, theInternational Day of Persons with Disabilities. The initiative also in line with the Article 9 of UNCRPD(UN Convention on the Rights of Persons with Disabilities) to which India is a signatory since 2007.
- According to the2011 Census of India, 2.21 per cent of the population or approximately 26.8 million Indians suffer from a disability.
The overall target is to make at least 50% government buildings disabled friendly.
1. Enhancing the proportion of accessible government buildings.
2. Enhancing proportion of accessible airports, railway stations, public transport.
3. Enhancing proportion of accessible and usable public documents and websites that meet internationally recognized accessibility standards.
The ‘Inclusiveness and Accessibility Index’ helps the industries and corporates to participate in the Accessible India Campaign by voluntarily evaluating their readiness for making the workplace accessible for Persons with Disabilities.
Three main parameters:
1.Inclusive policies and Organizational Culture: Equal opportunity and top management commitment, Organizational policies and culture,CSR.
2.Inclusiveness of the Supply Chain
Percentage with employees with Disabilities, Career growth
3.Awareness and Adaptations: Workplace adaptations, awareness and sensitization programmes, grievance redress.
3 components of accessibility:
A). accessibility related practices
B). infrastructure accessibility
C). product and services.
Accessibility is the key to inclusion and equal access for people with disabilities is the mantra for Sugamya Bharat Abhiyan. An accessible barrier-free environment is the first step towards fulfilling the right of people with disabilities to participate in all areas of community life and achieving the goal of Sabka Saath Sabka Vikas.
General Studies – 3
Topic: Indian economic growth and development
5) What do you understand by Gross Value Added (GVA)? How is it different from GDP? Critically examine how recent demonetization has affected economic growth in India. (200 Words)
Gross value added (GVA) is the measure of the value of goods and services produced in an area, industry or sector of an economy, in economics. In national accounts GVA is output minus intermediate consumption it is a balancing item of the national accounts’ production account.
GVA is linked as a measurement to gross domestic product (GDP), as both are measures of output. The relationship is defined as:
GVA + taxes on products – subsidies on products = GDP
The Gross Value Added (GVA) and Gross Domestic Product (GDP) give a picture of economic activity from producers (supply side) and consumers (demand side) perspectives respectively. Both of the measures need not match and there could be a sharp divergence due to presence of Net Indirect Taxes.
-GVA provides better measure of economic activity. Because GDP can record a sharp increase just on the account of increased tax collections due to better compliance/coverage and not necessarily due to increase in output.
– GVA is a better reflection of the productivity of the producers as it excludes the indirect taxes which could distort the production process. However, it can also be argued that GVA is distorted due to presence of subsidies.
– A sector-wise breakdown provided by the GVA measure can better help the policymakers to decide which sectors need incentives/ stimulus or vice versa.
DEMONETISATION IN INDIA:-
On 8 November 2016, the Government of India announced the demonetisation of all ₹500 (US$7.40) and ₹1,000 (US$15) banknotes of the Mahatma Gandhi Series.The government claimed that the action would curtail the shadow economy and crack down on the use of illicit and counterfeit cash to fund illegal activity and terrorism.The sudden nature of the announcement—and the prolonged cash shortages in the weeks that followed—created significant disruption throughout the economy, threatening economic output.The move was heavily criticised as poorly planned and unfair, and was met with protests, litigation, and strikes.
IMPACT OF DEMONETISATION ON ECONOMIC GROWTH OF INDIA:-
- Forecast of GDP growth rate
Global analysts cut their forecasts of India’s GDP growth rate due to demonetisation. India’s GDP in 2016 is estimated to be US$2.25 trillion, hence, each 1 per cent reduction in growth rate represents a shortfall of US$22.5 billion (Rs. 1.54 lakh crores) for the Indian economy. According to Societe Generale, India’s quarterly GDP growth rates would drop below 7% for an entire year at a stretch for the first time since June 2011.
· Drop in industrial output
There was a reduction in industrial output as industries were hit by the cash crisis.The Purchasing Managers’ Index (PMI) fell to 46.7 in November from 54.5 in October, recording its sharpest reduction in three years. A reading above 50 indicates growth and a reading below shows contraction. This indicates a slowdown in both, manufacturing and services industries.
- Some Core sectors were impacted adversely– Manufacturing, finance, real estate and services recorded less than 50% growth compared to previous year with fall in prices. But lower prices would boost demand in longer term
- Whileothers like Agriculture recorded decent growth owing to good monsoons (decrease in food prices), and electricity generation was higher due to adequate coal availability
- Implementation of 7th Pay commission led to higher demand (consumer durables), while switch to digital payment increased discretionary purchases
- Less decrease of interest rates by banks, led to lower multiplier effecton growth as credit did not get much cheaper
- Collection of Income taxes rose because of increased disclosureswhich provides boost towards stable fiscal regime
However, lack of data wrt informal sector (~45% of economy) led to extrapolation by CSO, which distorted the effect on India’s growth. As per Eco Survey, Govt. should capitalize on recent efforts via quick remonetisation, bringing real estate under GST’s ambit, reduce taxes and providing a stable tax regime
Topic: Resource mobilization
6) Of nearly 127 crore Indians, only 2.6 crore pay income tax. Do you think other Indians evade paying taxes? Critically analyse, especially by comparing with global scenario. (200 Words)
Taxes in India are levied by the Central Government and the state governments. Some minor taxes are also levied by the local authorities such as the Municipality. The authority to levy a tax is derived from the Constitution of India which allocates the power to levy various taxes between the Central and the State. An important restriction on this power is Article 265 of the Constitution which states that “No tax shall be levied or collected except by the authority of law”. Therefore, each tax levied or collected has to be backed by an accompanying law, passed either by the Parliament or the State Legislature. In 2015-2016, the gross tax collection of the Centre amounted to ₹14.60 trillion (US$220 billion)
Only 2.9 crore Indians filed personal income tax returns for the assessment year 2012-13 — that is less than 4 per cent of the 760 million adults enumerated in the 2011 Census. More than half these 2.9 crore individuals paid no tax at all.
- People earning 10 times national per capita income (NPCI) in India are 24 lakhs and in USA and UK are 12.5 lakh and 2 lakh respectively.
- The total number of persons earning 100 times the NPCI are 42,800 while that of USA and UK are 43,000 and 5,000.
- Comparing the statistics on relative level India’s tax base seems to be normal.
- Indias tax to GDP ratio is around 16% which is much lower than the emerging economies which is at 21%
WAYS TO IMPROVE THE TAX COLLECTION:–
- Cap on tax-free long-term capital gains:Long-term capital gains on listed securities were exempt from income-tax to increase participation by retail investors in capital markets. But ultra high networth individuals (HNIs) have benefited from tax-free capital gains more than retail investors. A cottage industry can start investing in illiquid securities for converting unaccounted income into legal income through tax-free capital gains. A reasonable cap on exemption for capital gains will protect retail investors’ interest and at the same time increase tax collection.
- Link transactions to filed taxes:The income-tax department collects information on various types of transactions such as buying and selling of securities, cash deposits and so on. As per newspaper reports, 1.2 million transactions couldn’t be linked to tax returns filed. Significant tax collection can happen if this information is used to detect undisclosed income.
- Monitoring jewellery stores:Most jewellery stores have a 24×7 surveillance system and cash counting machines at jewellery stores suggest large usage of cash in purchasing jewellery.
- Curtailing unaccounted money:Real estate provides a major avenue for deployment of cash/parallel economy proceeds. Reintroduce presumptive purchase of properties that are undervalued. This provision, in its short period of usage, was able to reduce the extent of black money in the real estate sector.
- Increase service tax:Services contribute more than two-thirds of the GDP but service tax contributes less than 20% of tax revenue. Service tax increases compliance as it is levied at the consumption stage.
- Streamline provisions:The forgotten tax revenue at 5.12 trillion or 72% of tax revenue in FY11 suggests that there is an urgent need for streamlining provisions. Maybe some of the exemptions are past their expiry date and need to be removed.
- Need for effective dispute settlement mechanism:Tax arrears of 1.45 trillion for FY11 suggest the need for launching an effective dispute settlement mechanism. A consent system can save considerable time and effort and convert arrears to actual tax collection. Resources saved on pursuing legal cases can be directed towards finding out undisclosed income from the information collected on various transactions
Topic: Science and Technology- developments and their applications and effects in everyday life
7) What is Li-Fi. Discuss its advantages over Wi-Fi and its potential in India. (200 Words)
Light Fidelity (Li-Fi) is a bidirectional, high-speed and fully networked wireless communication technology similar to Wi-Fi(wireless fidelity), using visible light instead of radio waves.
It is a form of visible light communication(VLC) and a subset of optical wireless communications (OWC) and could be a complement to RF communication (Wi-Fi or cellular networks), or even a replacement in contexts of data broadcasting.
It is wire and uv visible-light communication or infrared and near-ultraviolet instead of radio-frequency spectrum, part of optical wireless communications technology, which carries much more information and has been proposed as a solution to the RF-bandwidth limitations.
Visible light communications (VLC) work by switching the current to the LEDs off and on at a very high rate, too quick to be noticed by the human eye. When ‘on’, this can be equated to a positive signal (in binary terms = 1), when ‘off’, this can be equated to a zero signal (in binary terms = 0). So, there is, therefore, the ability to stream data as a series of ‘0’ and ‘1’ binary signals.
Although Li-Fi LEDs would have to be kept on to transmit data, they could be dimmed to below human visibility while still emitting enough light to carry data.
- Li-Fi communication can be provided via any source of light that can be controlled to achieve very rapid ‘on/off’ light signals. So, LEDs are one way of doing this. Equally, laser light sources can be used. However, traditional incandescent light bulbs cannot be programmed to achieve this, so they are not suitable for Li-Fi communications.
- The light waves cannot penetrate walls which makes a much shorter range, though more secure from hacking, relative to Wi-Fi.
- Direct line of sight is not necessary for Li-Fi to transmit a signal.
- LI-FI allows mobility, handover and multiple user access— features that make it different from other visible light communications (VLC).
- Short range, low reliability and high installation costs are the potential downsides.
ADVANTAGES OVER WI-FI:
- Enhanced speed (Wi-Fi *100). Would help with the internet of things.
- More secure than Wi-FI due to its short range.
- Overcome the limitations of Wi-Fi by providing data- heavy communication in short range.
- Li-Fi is expected to be ten times cheaper than Wi-Fi.Consumes comparatively less power than Wi-Fi.
- It is a green technology.
- System components- It requires only lamp driver, LED bulb and photo detector while WiFi requires installation of router, subscriber devices which make it complicated.
- Wider application- With less complication, interference and simplicity it can be useful in electromagnetic sensitive areas such as in underwater devices , aircraft cabins, hospitals and nuclear power plants without causing electromagnetic interference; and many places where WiFi is not feasible.
- LIMITLESS – Both Wi-Fi and Li-Fi transmit data over the electromagnetic spectrum, but whereas Wi-Fi utilizes radio waves, Li-Fi uses visible light. There is a potential spectrum crisis because Wi-Fi is close to full capacity, Li-Fi has almost no limitations on capacity.
The visible light spectrum is 10,000 times larger than the entire radio frequency spectrum.
POTENTIAL IN INDIA: –
- Connecting rural communities to internet.(Li-Fi technology in conjunction with the solar cells as receivers offer solutions that could deliver communications and access to WWW)
- Manufacturing infrastructure -It has enormous potentials in aviation, defence, robotics, instrumentation to bring in efficiency and effectiveness in the manufacturing ,mobilization.
- Will help in providing ubiquitous broadband access by easing the traffic management. By converting the traffic lights into LED based access points the traffic management can be made intelligent, adaptive and real time and so more efficient and effective.
- Moreover the street lights can also be converted to Li-Fi access points making them broadband access transmitters to mobile Li-Fi enabled smart-phones, converting areas into seamless hot spots.
This technology is the fuel of the next generation and has huge potential to benefit the humans and bringing the societies closer by inducing effectiveness to the communication process.
In contrast to radio frequency waves used by Wi-Fi, lights cannot penetrate through walls and doors. As long as transparent materials like windows are covered, access to a Li-Fi channel is limited to devices inside the room.
The future home & building automation will be highly dependent on the Li-Fi technology for being secure & fast. As the light cannot penetrate through walls hence the signal cannot be hacked from a remote location.
Underwater Application –
Most remotely underwater operated vehicles (ROVs) use cables to transmit command, but the length of cables then limits the area ROVs can detect. However, as light wave could travel through water, Li-Fi could be implemented on vehicles to receive and send back signals.
While it is theoretically possible for Li-Fi to be used in underwater applications, its utility is limited by the distance light can penetrate water.
Many treatments now involve multiple individuals, Li-Fi system could be a better system to transmit communication about the information of patients. Besides providing a higher speed, light waves also have little effect on medical instruments and human bodies.
Vehicles could communicate with one another via front and back lights to increase road safety. Also street lamps and traffic signals could also provide information about current road situations.
Topic: Indian economic growth and development
8) Differentiate between food inflation and core inflation. Discuss the trends in these inflations as revealed in the recent Economic Survey. (200 Words)
The Economic Survey 2016-2017, Chapter 8
Food inflation is the inflation observed for the wholesale and retail prices for food items. On the other hand, core inflation refers to the inflation in the prices of various items, apart from food and fuel. So, core inflation excludes high price-volatile items under its basket.
For food inflation, the following trends have been indicated in the Economic Survey:
- In the earlier quarters, food inflation rose due to an increase in the prices of pulses and perishable vegetables.
- However, the inflation eased to an extent later on due to better monsoon rainfall received this year, and increased kharif and rabi crop sowing.
- The average inflation for the April-December 2016 period was close to 5 %. However, the inflation for December 2016 has been 3.4 %.
- CPI food inflation dipped to two-year low of 1.4% in Dec’16. Inflation for pulses dipped to negative 1.6% in Dec’16. Vegetables remained negative since Sep’16.
- PARTICULAR TRENDS –
- Pulses – Major contributor of food inflation. Persistently high from mid-2015 to mid-2016 due to shortfall in domestic and global supply. From Jul’16 onwards, prices started declining owing to good monsoon prospects, increased Rabi pulses sowing and govt buffers.
- Sugar – Low production and hard international prices lead to rise in sugar prices.
- Vegetables – Increased during summer but later decreased.
For core inflation, the following trends have been observed:
- The core inflation has remained sticky, at about 5 % for the period from April-December 2016.
- Clothing, footwear, education services, etc have contributed to the consistent high inflation.
- Inflation for transport and communication is rising due to rise crude oil prices.
- high international gold prices have also contributed to this aspect.
As per the Economic Survey 2016-17, the overall inflation in terms of CPI and WPI, have so far been controlled. But, increasing commodity and energy prices have created new concerns, and hence the inflation targets, through the Monetary Policy Committee, now need to be considered accordingly.